I interviewed Junaid Tahir who has his finger on the pulse of everything from fluctuating commodity prices and measuring total cost of ownership to state of the supply chain industry in Pakistan and the rise of 3PLs in the region. Junaid Tahir provides a bird's eye view of the Pakistan's supply chain industry, and offers suggestions for maintaining an agile supply chain in a volatile economic environment.

Junaid recently designed and implemented a system to make stocks available at all IFFCO warehouses, which proved highly successful despite inaccurate forecasts. Junaid is currently performing research for the development of a predictive model (mathematical/qualitative) which will closely match and predict the company's stock requirements.

Dealing with Fluctuating Commodity Prices

Junaid understands how fluctuating commodity prices can affect the supply chain. Commodity prices, he says, have been fluctuating since the financial crisis gripped the economy, and most of the fluctuation has been on the downward side. Junaid believes, in uncertain demand environments, companies with low value-added products, and whose commodities form a significant percentage of the cost, are destined to fail unless they have smart systems to predict demand and align supplies with that demand.

According to Junaid, many mass market companies may be structured to acheive efficiency rather than flexibility. Hence, efficiency would translate into lower manufacturing per unit and higher holding cost as the batch size would be higher. Whereas flexibility would mean higher manufacturing cost per unit, but lower inventory holding cost and price decrease risk. In Junaid's opinion, it all boils down to how the total cost of ownership (TOC) is measured.

What Gets Measured, Gets Managed

Juanid Tahir knows from personal experience that no matter what you're looking to improve, the first step is to measure that activity, and improvement will automatically follow. "There are many hidden costs that companies are not measuring," Junaid says, "Companies only focusing on service levels, and not measuring inventory holding costs or price change costs -- since these may be quite dynamic -- may end up at a local maximum point, rather than global optimum solution. In order to determine the total cost of ownership, one has to measure the right things."

The State of Supply Chain in Pakistan

Supply chain is an up and coming field in Pakistan, but Junaid Tahir says despite the fact that all companies have supply chains, the realization that supply chain is about cross-functional teams working together, based on well integrated systems, seem to be lacking. However, any idea having a sound and sustainable value proposition will eventually be adopted, and Junaid says it's only a matter of time until Pakistan's budding supply chain industry hits its stride. Much of it will depend on the level of technology adoption, he believes, which is still not very high as far as ERPs or company-wide systems are concerned.

The Rise of Supply Chain Companies and 3PLs in Pakistan

Based on perception, Junaid Tahir says there seem to be more supply chain companies and third-party logistics providers in Pakistan than in the past, perhaps because this is an area that can easily be outsourced. Pakistan is a geographically dispersed country, so using a third-party provider, with networks in different regions, makes sound financial sense. Instead of building a supply cain network from the ground, up, using an outside resource presents a lower cost option for many companies. Junaid also attributes the increase in supply chain companies and 3PLs in Pakistan to their ability to adopt new technologies and offer better IT systems, which can provide improved visibility into the inventories, freights and operations.